Dividing the surplus: New farm bill will hinge on budget considerations

THE NEXT 18 MONTHS “will be critical for the cotton industry and for agriculture” as Congress and the administration begin divvying up the budget surplus and the pace of the debate on a new farm bill is stepped up, says John Maguire, vice president of Washington operations for the National Cotton Council.

A primary focus for council leaders will be “trying to be sure that we get our fair share of the (budget) resources so we can develop good, comprehensive farm policy.”

Speaking at the Southwest Farm Press-sponsored Southwest Crops Production Conference at Lubbock, Texas, Maguire said the federal budget “is going to drive the farm policy debate” on both short term and long term funding for agriculture.

But, since the current farm bill runs through 2002, and prices for most commodities still put farming in the non-profit category, the nation's farmers and ranchers will continue to need “additional short term economic assistance” until the commodity programs are changed and improved.

“Input costs are increasing astronomically, crop prices continue to be persistently low, and export demand is sluggish — even though the Asian economy is recovering, it is doing so slowly. So, farm income projections continue to be low.”

While the U.S. federal budget surplus is reported to be $5.61 trillion, Maguire says the across-the-board tax cuts proposed by President Bush will eat up $2.2 trillion of that, and the Social Security trust fund will claim another $2.49 trillion.

“If the president's tax cuts go through, there would be about $1 trillion in surplus funds to apply toward debt servicing and domestic spending programs such as education, defense, and farm policy.

“So, as they work down that $5.6 trill surplus, we in agriculture need to work hard to get all the support we can, and to get the message to every member of Congress that we need a fair share of that surplus in order to write effective long term farm policy.”

NCC leaders and others are focusing immediately on hearings now underway by House Agriculture Committee Chairman Larry Combest, R-Texas.

“Last year, he held a series of hearings around the country, during which opinions offered were basically of two types: (1) The current farm policy is pretty good, but there's not enough money, and (2) the current policy is lousy and there's not enough money.

“So, chairman Combest's charge to agriculture this time around is: ‘I've heard your problems. Now, I want you to bring me specific proposals — cost versus benefits, how it will impact other crops, etc.’”

Maguire says, “We need to work with the chairman on the budget issue and make sure we're backing him in his efforts to get sufficient budget authority for short term and long term policy.”

For cotton long term, he says, the council wants a continuation of the marketing loan program, the three-step competitiveness program, and a combination of multiple additional delivery systems through fixed, decoupled payments and countercyclical payments.

“We would like to deliver back to the producer the same level of returns they got in 1999 for a combination of marketing and transfer payments.”

While Maguire says it's possible to do this and end up with good policy, “if there are payment limitations applied that would keep these benefits from reaching the farmer, then we won't have succeeded.

“We're going to suggest that payment limitations be eliminated; if that can't be done, we're going to push very hard to try and make sure they're mitigated.”

He said producers have asked the council to continue working to see that there is a cottonseed assistance program in any farm policy that's developed.

Maguire cautioned producers to remember that the current farm bill has two years to go. “People in South Texas are already planting, and decisions are being made elsewhere. So, we're probably looking at another short term economic assistance package of some kind for 2001.”

Because it may not be possible to get new commodity programs developed, “we may be looking at 2001-2002 for some sort of emergency short term programs, with new farm policy and a new farm bill in 2003.”

He said the council is going to “focus a lot of effort” on trying to deliver funds for the boll weevil eradication program; for the ginning laboratory at Lubbock, “which does a lot of important research”; conservation, research, and export promotion programs; and emergency assistance programs.

The council will also be working in the area of tax law, trade policy, trade, pesticide regulations, biotechnology, and immigration issues, Maguire said.

Several hundred farmers, agribusiness representatives, and Extension and research leaders attended the conference.